Korea Times is reporting that Tesla has approached several battery manufacturers in order to “diversify its battery-sourcing channels beyond Japan’s Panasonic.”

Tesla is reportedly in talks with at least three additional battery makers. The list includes LG Chem, Samsung SDI and SK Innovations.

Tesla has set some lofty production goals for both the Model 3 in 2017 (up to 200,000 units) and overall EV production in 2018 (500,000 between the Model S, X and 3). Bringing in a large third party supplier for the component that Tesla is the most unlikely to have ready in such high volume inside that shortened time window (battery cells) would seem to be a logical step.

Korea Times adds:

“LG Chem is expected to win the Tesla business thanks to its output commitment, good pricing and on-time delivery.”

An unnamed official told Korea Times the following:

“Tesla intends to use more Korean technology on its Model 3. It decided to use tires manufactured by Hankook Tire and LG Display will possibly be supplying its OLED panels for the automotive systems. Additionally, Tesla is testing the manufacturing capability and production of LG Chem, Samsung SDI and SK Innovation.”

Korea Times reached out to all three battery makers for comment on their involvement with Tesla. The response received from the trio was basically the same:

We can neither confirm nor deny any business deals with major clients…

But Tesla executives were apparently spotted visiting research centers at all three of the above-listed battery manufacturers.

If Tesla secures an additional battery partner, then Panasonic would no longer be the sole volume cell supplier for Tesla. (LG Chem supplies packs for Roadster upgrades today).

Tesla drives a hard bargain but is also the largest market and Panasonic has been bitching about ramping up for 2 yrs now.
Tesla also has the battery materials he preordered when others balked including all those mentioned and now there will be a material shortage with Tesla in the driver’s seat.

How on earth could these battery suppliers possibly provide “cheap enough” batteries without the economies of scale that a Gigafactory provides, which are supposed to lower battery costs by 30%? The math doesn’t add up.

Lol. Don’t try to figure out the logic. These are the same fanboys who in comments till 1 hour ago would have claimed that BMW and GM cannot hope to compete because they don’t have a captive source of batteries.

Reading comprehension is not your strong suit. My comment was about the cost of the batteries, not the capacity to supply the batteries. How can these battery suppliers possible achieve the 30% cost reduction that can (according to Tesla) only be achieved by having the economies of scale of a Gigafactory, when none of these battery suppliers has a Gigafactory-sized battery factory? Can you answer that question for me? Hmmm?

No where in that article did it state Tesla is asking the Koreans to meet the Gigafactory price. Tesla is already committed to buying cells from Panasonic Japan for a higher than GF price, enough for ~150k MOdel S/X cars.

Tesla may be willing to pay a premium to meet its Vehicle and Energy Storage sales/market share goals in 2017-2020.

Neither did the Korea Times article state Tesla would be buying Korean cells indefinitely.

If Tesla pays a “premium” to meet their sales/market-goals in 2017-2020, then they won’t be profitable (or less profitable). If they raise the price of the Model 3 to increase profits, demand will suffer, reservation will be cancelled, it’ll be bad PR, and they still won’t be profitable. If they are not profitable during 2017-2020, the stock price will be hammered and Tesla won’t be able to as much capital per share through a stock offering. If Tesla has to issue more shares to raise the capital it needs, then that would mean more dilution for existing stockholders, which will further hammer the stock price. Likewise, no profits from 2017-2020 would mean Tesla would have to offer a higher interest rate on its debt if it decided to raise capital in the bond market.

I can read just fine sven. The answer you may or may not be looking for is called competition and negotiation. Its obvious that Tesla is dangling some large contracts to these other battery companies IF they can reach the price points that Tesla requires.

How these companies get to that point is obviously up to them. Maybe LG is willing to produce cells at cost in order to capture other sales like the displays.
reportedly this is how GM got the 145kwh pricing for the Bolt.

This explains why Panasonic got off their butts and dramatically increased the amount of their funds spent on Giga-Factory lines as Tesla is showing they are willing to go to other suppliers if Panasonic isn’t fully committed.

This doesn’t make a lot of sense. We’ve been told the Gigafactory is capable of making all the cells/packs necessary for the Model 3 and Powerwall. And that the Gigafactory was necessary to get the cell/pack cost down to a level to make a $35k vehicle possible. Now there is talk about reaching out to other suppliers? We were just told a couple of weeks ago that Tesla’s pack cost is under $190/kWh which is cheaper than the Bolts $145/kWh cell only price. So what gives? Something just isn’t adding up with Tesla.

I think it is pretty clear that this is a problem of being able to ramp up quickly. Tesla has moved forward their goal of cranking out hundreds of thousands of Model 3 cars and the Gigafactory won’t be able to handle that in the next 18 months. So they are reaching out to other suppliers.

But who knows . . . maybe it is all a ploy to play them off each other and squeeze them.

How the heck was Panasonic supposed to spend funds on Gigafactory lines prior to Tesla finishing construction of the first module of the Gigafactory structure (approximately 14% fo final footprint)? You’ve got to build the building first before putting in the battery-making equipment.

Well sven, maybe they would do things like order all the new machinery and other things necessary for the opening of a production line ahead of the first phase of the building being completed so it would be ready to move in?

Don’t you know how business works. You order it now, pay a small deposit, then pay the full amount when the equipment is installed or pay installment payment as the installation progresses. You’d be a fool to pay 100% upon placing a order for machinery and equipment. When you get your house remodeled, do you pay the contractor 100% in full upon signing the contract?

I’m pretty sure that Tesla is demanding a 100% commitment from Panasonic and is insisting that they put up the money WITH the proper lead times for all the lines that will go into the entire Gigafactory and this is not small change.

It is also a well known fact that Tesla had problems with Panasonic’s commitment to the Gigafactory, at least in the beginning.

Probably wise not to rely on just one critical supplier, but pack cost targets will likely be harder to reach?

How much excess capacity does LG, SM, SK have for Model S / X, M3, Model Y, Roadster 4.0, or various Tesla Energy Products? Would another supplier be moved into Giga1, alongside Panasonic, or would these other parts be built / shipped in Korea? Or would there be a Giga2 in Asia?

If I’m not mistaken, Tesla is negotiating with Samsung and LG Chem to make batteries in their own factories, not the Gigafactory. I see nothing in the source story that indicates that Tesla wants Samsung and LG Chem to make batteries in the Gigafactory alongside Panasonic or have several battery manufacturers under one roof in the Gigafactory.

I just read the Korean Times article and found this interesting quote:

Although LG is pushing the pouch-type battery as its mainstream product with Samsung SDI focusing on the rectangular-type battery, sources who are involved with the issue say Tesla may use LG and Samsung’s mainstream technologies to keep adequate inventory levels as it’s been widely expected the supply for the Model 3 will remain tight.

Hmmm. Maybe Tesla will switch to prismatic cells for M3.

Prismatics would offer increased energy density on a volumetric basis at the pack level. The only reason Tesla’s packs use cylindrical is because of cost and energy density (of 18650 cells).

I’ve been looking into it and there are now prismatic cells that offer the same energy density as the 18650’s at the cell level. Therefore, given the same volumetric energy density at the cell level, the pack would have higher volumetric energy density at the pack level due to the more efficient packing geometry of prismatics.

The only reason for staying with cylindricals is cost and Argonne has stated that in high production the cost differences are small.

I think there is more to it than that. For example, the thermal control system and the battery management system. Those things would have to be completely redesigned and use new software to switch to a different battery form factor.

I think Tesla also goes with the many small cells instead of fewer big cells because that creates more parallelism such that Tesla can draw out more power and can charge faster.

“the thermal control system and the battery management system. Those things would have to be completely redesigned and use new software to switch to a different battery form factor.”

agreed. Like I said I doubt they would switch at this point….but I still think they could get better energy density with prismatics, assuming they could equal cylindricals energy density at the cell level and I think they can.

spec said:
“I think Tesla also goes with the many small cells instead of fewer big cells ”

Tesla has already said they will go to a larger format cell. However I can’t find anyplace where they specifically said the larger cells would still be cylindrical. Only hints.

Here’s a great TMC thread where a guy dug up all of Tesla’s quotes on the battery. It’s pretty interesting. They talk about the bigger geometry cells and imply that they will be cylindrical by referring to the “can”.

Again using SparkEV’s LG battery as an example, it’s capable of 2.5C+ to 80% without taper, far quicker than Tesla’s with quick taper. SparkEV’s power is 105 kW from 18.4 kWh battery (5.7C), even more than that of Tesla P90DL. It’s compelling solution IF Tesla can use it.

I doubt LG batteries can fit under the low slung Model 3. The Bolt batteries are landscape pouch type, they are thicker than Tesla pack. The Bolt is a much taller car than Model 3 partially because of thicker battery pack.

This brings up the small issue of promise of cost reduction from gigafactory. There were some skeptics that believed the economy of scale resulting from gigafactory is insignificant. This appears to confirm that skepticism. If LG can produce cells at competitive price then the whole argument of gigafactory is questionable.

LG just need to deliver cells. On time. That is the most important now.

The price reductions of the GF wasn’t supposed to kick in right from the start anyway. It will take time for the GF to turn into that large scale, well oiled machine that produces the promised cost reduction.

The first Model 3’s will be produced with lower margins, and as cheaper cells arrive from the GF, Tesla can increase the margin. Or they can lower the price of the Model 3 when they reach the 200,000th car and their tax credits start running out.

No, because Musk pushed the needs up two years – the GF was supposed to be sufficient when they reached 500k in 2020. Now that they are targeting 500k by 2018, the GF won’t be at full capacity in time.

To build a car in China, Tesla by Chinese law would have to form a 50/50 joint venture with a Chinese company, that joint venture must own the technology, and the joint venture would be prohibited from using Tesla as the brand name for the cars that it makes and sells in China. This is why the Nissan and its Chinese JV partner Dongfeng make and sells a rebadged LEAF in China, as the Venucia e30 and not a LEAF.

Ouch! That casts serious doubt on the Gigafactory project! It was sold in as the way to push down the price of the batteries to make an affordable car possible. Now it turns out that the competitors do a pretty good job of doing that as well, casting doubts on the competitiveness of Tesla. Is the Gigafactory not that great of a project after all? Will it be a costly failure, in a time where Tesla is struggling to make ends meet?

Sure but hopefully it will be more than 14% by 2018. It was supposed to be 100% in 2020, at which time Tesla would reach 500k cars per year. That is already a very aggressive goal, this new 500k by 2018 timeline is completely unrealistic! I definitely think that Elon Musk has bitten off far more than he can chew now.

Nope, not yet…it’s just the simple math that the GF was set up to be running 100% in 2020, which was the goal for 500k vehicles. Now that the goal is for 500k in 2018, that leaves them short a bunch of cells. There has been no announcement on whether the GF schedule can be pushed ahead or not.

Pasanosic will bail out very soon, they have decided to terminate the relation as Tesla is nasty and very unreasonable, they have quarreled for the past 6 months as Pasansis is unwilling to put money in, as for Koreans, they are not going to supply the cells at a loss, never mention they would put big commitment into supplying M3 cells, as no one really know the REAL demand for the car once it comes out, no one knows the price, so it is suicidal for LG/Samsung/SK/Pasanosic to invest a huge amount of money without REAL sales.

Per [ the “/s tag” ] idea, when you cut from ‘/sarc,…to ‘/s’ – and create confusion as what the ‘s’ part means – you take clarity away from your intent.

Beyond that, as to Tesla seeking further cell source, it is simply a wise decision since Panasonic is already not their only cell supplier connection with existing processes and projects, and lead times for additional cells might be beyond Panasonic’s commitment level, or preparednes, still!

Battery Expert said:
“Pasanosic will bail out very soon, they have decided to terminate the relation. . .”

Not to worry, Panasonic always has the Li-ion battery sales for Toyota’s Prius HEV and Prius Prime PHEV to fall back on. In the future, if Toyota decides to use a L-ion battery instead of a NiMh battery in the next generation Mirai, all that battery business would belong to Panasonic. 😉

“Tesla intends to use more Korean technology on its Model 3. It decided to use tires manufactured by Hankook Tire and LG Display will possibly be supplying its OLED panels for the automotive systems. Additionally, Tesla is testing the manufacturing capability and production of LG Chem, Samsung SDI and SK Innovation.”

Any Tesla comment you don’t like makes that comment FUD? Fact is, Tesla needs all the help they can get to meet the demand, and there’s nothing wrong with using foreign content, or even assembling at another country. Frankly, I wish Tesla would manufacture in every country in the world so that they can meet the demand.

He wrote “I can see majority of parts”, not that Tesla will do so. I can see entire car being made in Korea with ALL parts from Korea, not just screens or “majority of parts”. This is not a FUD, but a wish that Tesla will do anything and everything to meet the demand and eventually take over the world (and you know they will).

Tesla has been increasing the use of silicon anode in its battery. Silicon anode increases engery density but the trade off is reduced life cycle. Maybe Tesla has figured out the solution and will outsource it’s technology to LG, Samsung, or SK.

JYVolt quote:
“Tesla has been increasing the use of silicon anode in its battery. Silicon anode increases engery density but the trade off is reduced life cycle. Maybe Tesla has figured out the solution and will outsource it’s technology to LG, Samsung, or SK.”

I think you meant Panasonic not Tesla. but I get the drift. I’ll put money that LG is every bit up to snuff on the latest cell geometry and chemistry and that they also have small amounts of silicone in the anodes..

I’d also wager that LG now has prismatics that equal Panasonics cylindrical cells in volumetric energy density.

“it is, actually, as a result of improved cell chemistry. We’re shifting the cell chemistry for the upgraded pack to partially use silicon in the anode. This is just sort of a baby step in the direction of using silicon in the anode. We’re still primarily using synthetic graphite, but over time we’ll be using increasing amounts of silicon in the anode.” -elon musk

For the Volt, LG is making the cells (pouches?)
and Chevrolet assembles them into the battery packs in their US factory.
Is it possible, Tesla does the same, IE, Panasonic manufactures cells in their own factories, and Tesla only assembles those cells into the large battery packs at their GF.

If so, they could source battery cells or pouches, (whichever they decide to go with) from several manufacturers and still do the assembly into packs at the GF?

Elon did not get the huge TSLA stock price jump he was desperate for after revealing M3, remember M3 revelation would only decrease the demand for Model S and Model X (maybe not 50%, but even 20% is bad), yet he did that, because they are running out of money, they need to raise huge amount of $$$, and all the deposit was immediately spent to pay creditors. We shall see the split between Panasonic and Tesla very soon.

If I am Koreans, I have to wonder if Tesla demand me to build more factories to supply him? The answer would be “Hell No”, also the Koreans would wonder: if we sell a lot of batteries to Elon with Net90, we may never get paid.

Elon has consistently demonstrated he is a pathological liar. The Koreans are very shrewd businessman, will not be taken a ride. Also Elon begged Hitachi Kagaku, Toda, Kureha, Umicore, Sumitomo, Kanto Denka, BASF, Tomiyama, GTHR, etc {these are major Li-ion battery component suppliers) to invest in Gigafactory, they all said “NO! SOB”

Everything you wrote here is utter garbage of course, but at least you spell better than the other “Battery Expert”. By the way, do they bother to vet you guys? Or is it simply ‘Release the hounds of disinformation!’

Panasonic is either balking at upfront investment in the Gigafactory or they can’t ramp up in time, but going to a third party only helps turn batteries into more of a commodity to be outsourced, not insourced. Musk wants to vertically integrate (he calls it “thinking by first principles”) but it only works in some situations. Apple, the best example of vertical integration, specifically outsources manufacturing. They know better.